Car Insurance Rates Up in Arizona

By Jeanny HopperPublished: Thursday, July 2nd, 2009

A trend, which began last year among auto insurance providers in Arizona, has shown no end yet. The latest tally from the Arizona Department of Insurance reveals that of the many insurance companies operating in the state, 77.46 percent are or will increase premium rates.

Of these providers, Colorado Casualty Insurance Co. posted a 30.20 percent hike. Its close competitor Garrison Property and Casualty Insurance Co., follows with a 30.20 rate increase. Colorado Casualty is a subsidiary of Liberty Mutual Group Company.

Erin Klug, a spokeswoman for the Department of Insurance, says that companies have the entire year to report any rate changes. She adds that providers are not mandated by the state to adjust their rates at any particular time.

Last year, insurers had an average of 3.72 percent in increases, according to the department. The figure follows a 0.32 decrease in 2007.

Ron Williams, executive director of the Arizona Insurance Council, believes that there is a definite increase of the premium rates in the state. He however points out that 20 of the largest insurance providers in Arizona dropped their car insurance rates by 5 percent in 2006.

Williams adds that while intense competition can sometimes lead to significant rate decreases, losses and rising operating costs force many companies to hike premiums to stay afloat. With no end in sight yet for the nation’s economic recession, more and more Americans are failing to settle their coverage dues, forcing insurance firms to increase rates.

Paul Hollie of Colorado Casualty says that the company is actually paying out more in insurance claims than it is earning with premiums. He says that because premium rates are underpriced in Arizona, providers have to resort to hikes. Hollie points out that some drivers can actually see rate decreases because of competition in the market.

Despite these latest developments, the three largest car insurance firms in the state have refused to increase their rates. American Family Mutual Insurance Co., Farmers Insurance Co. of Arizona, and State Farm Mutual Auto Insurance Co. have not issued any rate increases this year. Combined, the three companies control 30.3 percent of all live car insurance policies in the state. On the contrary, American Family reported a 3.1 percent decrease while Farmers Insurance filed a 0.4 percent drop.

Klug says that because of the intense competition in the auto insurance market, consumers have more options to choose from if they think they are paying for high premiums. He suggests that policyholders should review their coverage at least once a year to determine if they are paying less or more for their premiums.